Sales By Area

Criteria: Status: S, Category: Residential
Statistics for Entire Mls from 12/1/2008 to 12/31/2008 Kind:Sngl Fam Det
Counties:Charleston

Area

# of Sales

Total Sales

Avg Sales

15

$3,629,900

$241,993

29

$7,229,146

$249,280

4

$1,202,000

$300,500

18

$4,982,079

$276,782

15

$5,388,907

$359,260

1

$166,000

$166,000

1

$1,385,000

$1,385,000

10

$1,412,907

$141,290

25

$4,029,207

$161,168

12

$5,918,988

$493,249

38

$17,671,189

$465,031

4

$3,342,500

$835,625

1

$900,000

$900,000

2

$860,000

$430,000

5

$1,099,000

$219,800

180

$59,216,823

$328,982

As you may have heard by now, the Federal government, through the newly created Federal Housing Finance Agency, has taken over Fannie Mae (FNMA – The Federal National Mortgage Association) and Freddie Mac (FHLMC – The Federal Home Loan Mortgage Corporation).  This was done to try to shore up confidence in Fannie and Freddie, which together have lost over $14 Billion in the last 4 quarters.  
 
Why does this matter?  Fannie Mae and Freddie Mac own or guarantee almost half of the $12 Trillion in outstanding mortgage debt in this country.  Financial markets have lost confidence in Fannie and Freddie as a result of their huge losses.  Their stock values have dropped by over 90%, and foreign banks and other investors have been unloading their holdings of FNMA and FHLMC stock.  This has caused FNMA and FHLMC to have to raise capital by selling bonds at “higher than treasury” market prices.  So, while long term treasury interest rates have been dropping, rates on mortgage bonds have been going in the opposite direction.  This move by the Federal government, and the full backing of the U.S. Treasury that comes with it, should help to bring FNMA and FHLMC’s borrowing costs down which will ultimately lead to lower mortgage rates.
 
Who wins and who loses?  If it goes as planned, the winners will be the embattled housing industry.  With lower borrowing costs and lower mortgage rates, mortgage lenders may loosen up some of the tighter underwriting rules that they are forcing on the system.  Hopefully this will reduce the backlog of inventory of both new and existing homes on the market.  Obviously this would be good for real estate agents, builders and lenders alike!  The losers are likely to be the current stockholders of FNMA and FHLMC stock, which may be worthless after its all said and done. 

Will this work?  It certainly should!  What we know for sure is that the status-quo with FNMA and FHLMC would certainly not work. They could not have continued on with their viability in question, their stock prices continuing to plummet on every bit of bad news, and their borrowing costs continuing to rise.  

Should I get excited about this?  Yes!  You should get excited because this will definitely boost confidence in the credit system.  Lower interest rates will get some of the “fence-sitters” and the “want to moves” back in the game.  Hopefully bad news in the mainstream media of the pending demise of FNMA, FHLMC and the whole mortgage industry will now be replaced by positive news on lower interest rates, rising home sales and increasing consumer confidence.

Frequently Asked Questions About the First-Time Home Buyer Tax Credit

The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified first-time home buyers purchasing homes on or after April 9, 2008 and before July 1, 2009.

The following questions and answers provide basic information about the tax credit.

1. Who is eligible to claim the $7,500 tax credit?
First time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.

2. What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit.

3. What types of homes will qualify for the tax credit?
Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses, and condominiums.

4. Instead of buying a new home from a home builder, I have hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after April 9, 2008 and before July 1, 2009.http://www.irs.gov/pub/irs-pdf/p519.pdf> .

15.    Does the credit have to be paid back to the government? If so, what are the payback provisions?
Yes, the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.

16.    Why must the money be repaid?
Congress’s intent was to provide as large a financial resource as possible for home buyers in the year that they purchase a home. In addition to helping first-time home buyers, this will maximize the stimulus for the housing market and the economy, will help stabilize home prices, and will increase home sales. The repayment requirement reduces the effect on the Federal Treasury and assumes that home buyers will benefit from stabilized and, eventually, increasing future housing prices.

17.    Because the money must be repaid, isn’t the first-time home buyer program really a zero-interest loan rather than a traditional tax credit?
Yes. Because the tax credit must be repaid, it operates like a zero-interest loan. Assuming an interest rate of 7%, that means the home owner saves up to $4,200 in interest payments over the 15-year repayment period. Compared to $7,500 financed through a 30-year mortgage with a 7% interest rate, the home buyer tax credit saves home buyers over $8,100 in interest payments. The program is called a tax credit because it operates through the tax code and is administered by the IRS. Also like a tax credit, it provides a reduction in tax liability in the year it is claimed.

18.    If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

19.    For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
(Source: Joel Greer and Leah Odom, Carolina One Mortgage)

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

5. What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.

7. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $7,500 by 0.5. The result is $3,750.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

8. Does the credit amount differ based on tax filing status?
No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files their taxes as “married filing separately” (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns.

9. Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit?
In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price.

10.    I heard that the tax credit is refundable. What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).

11.    What is the difference between a tax credit and a tax deduction?
A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $7,500 in income taxes. If the taxpayer receives a $7,500 deduction, the taxpayer’s tax liability would be reduced by $1,125 (15 percent of $7,500), or lowered from $7,500 to $6,375.

12.    Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
No. The tax credit cannot be combined with the MRB home buyer program.

13.    I live in the District of Columbia. Can I claim both the DC first-time home buyer credit and this new credit?
No. You can claim only one.

14.    I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519 <

One of the detriments to 24 hour news is negatively exaggerated spin.  Think about it.  How often does the news begin with a simple statement like ”So and so stubbed his toe….”  After the commercial they continue with, “So and so, will he lose his foot? Let’s interview three people who have no expertise whatsoever but can talk like they do and scare the dickens out of you…”  By the time the “news” program is over, Dr. Expert is doing a special segment on gangrene and you are left thinking terrible things about a relatively minor incident.  SPIN.  It can sneak up on you before you know it and leave you feeling utterly victimized by negativity. 

GET THE FACTS

Soap box aside, let’s talk reality about the current Charleston real estate market.  Now, before you make assumptions, please note that I am a Realtor but I am not a Pollyanna.  This market is definitely challenging to anyone who bought high and needs to resell quickly.  It is also difficult to see the same profits that we witnessed 3 years ago.  But let me let you in on a little secret: The upswing of the last five years was predictably unsustainable.  Like any market, what goes up has to come down in order to keep moving.  It is the natural progression of every single commodities market in human history.   

THIS IS A NORMAL MARKET.  

If you look at the past 30 years of real estate sales data, the median time for a house to stay on the market before selling is approximately 9-13 months. That’s hard to believe if you’ve only paid attention for the last few years. This is where long-term vision is advantageous. 

Call me a throw-back but in my opinion, unless you are a builder or a speculator, buying a house should be a long term capital investment. Long term means more than 5 years.  So let’s examine price points over the last five to ten years. 

In 1998, the average Single Family Home in Charleston County sold in 122 days for approximately $142,068.00.

Five years later, in 2003 the average Single Family Home in Charleston County sold in 62 days for approximately $249,784.00.

In 2008, the average Single Family Home in Charleston County is selling in 100 days for approximately $297,038.00. 

So, chances are that if you bought a home 5 years ago and sold it today, you would see an 18% profit on your investment. If you bought 10 years ago you would realize a 109% profit.  Not bad! Show me stocks and bonds that make that kind of money.  

So what is all the doom and gloom about?  Salability.  The difference between the 1998 market and today’s market are the odds of selling.  In 1998, approximately 6 out of every 10 houses that hit the market went under contract.   That’s a 60% chance of selling. By 2003 that number climbed to 80%. Today’s odds are 20.9%.  That means that for every 10 houses that hit the market, only 2 will sell.  And if they do sell, they will probably sell in the first 100 days.  If they do not sell within that time frame, chances are that they may not sell at all, unless something gives.  That something is usually either price or condition.

Why?   

1. Mortgages are harder to come by unless you have great credit and a decent down payment. There are fewer buyers out there.  Oh there are lots of folks who want to buy, but most can’t get qualified.
2. Inventory is extremely high so buyers expect the home to be better than everyone else’s home, perfect in fact. 
3. Houses up for resale cannot compete with new construction because builders are in such a crunch that they will give incentives that go above and beyond the norm just to move their inventory. 

So what does all this mean to you? Depends on which side of the table you’re on.  As a seller it means that unless you are selling a long-term investment, you will need to lower your expectations on profitability and increase the elbow grease necessary to make your home the perfect shiny new product for sale. A great agent can help you do both. 

As a buyer, make sure you are well equipped to purchase, with a decent down payment and a healthy credit score.  Check out your buying ability with a mortgage lender before you go shopping for something you cannot truly afford. Once you are qualified, get a great agent to help guide you through the purchase.  Chances are that you can get a good deal, but not a steal. 

The most important thing to remember is that whether you’re a buyer or a seller, chances are that your long-term investment will realize a long-term profit, if you have the patience and the wisdom to reap your rewards.

(Source for Statistical Data: My own research of Single Family Home Sales since 1998)